Experts warn housing supply shortage and rate uncertainty could stall progress
While the government celebrates progress on inflation, analysts and industry leaders continue to urge caution, warning that underlying pressures may persist without comprehensive solutions to housing supply and careful management of monetary policy.
Australia’s headline inflation has fallen to its lowest point in almost four years, at 2.8% for the year to September, consumer price index figures released by the Australian Bureau of Statistics on Wednesday have shown.
This marks a significant drop from the 6.1% inflation rate recorded when the current government took office, a trend that treasurer Jim Chalmers (pictured above left) attributes in part to government policies, including energy rebates.
“We are making welcome and encouraging progress in the fight against inflation, but we know Australians are still doing it tough,” Chalmers said in a statement. “The numbers show we are on track and on target for a soft landing in our economy.”
The treasurer, however, admitted that global factors, such as recent volatility in oil prices, continue to pose risks.
Industry experts have also warned against interpreting the latest inflation figures as a sign of sustained stability.
Chris Christofi (pictured above right), founder and chief executive of Reventon, noted that much of the recent easing was driven by government interventions like electricity rebates and temporary price drops in essentials.
“The question remains: is this easing in inflation a true shift towards stability or simply a temporary effect of government intervention?” Christofi said.
He pointed out that core inflation pressures, particularly in housing and services, remain high, suggesting the RBA may need to keep rates steady to avoid reigniting inflationary pressures.
Housing supply issues could further complicate inflationary dynamics, according to Master Builders Australia chief executive Denita Wawn (pictured above centre), who stressed that the country’s housing shortage is pushing up rental prices.
“Increasing the supply of new homes, including rental accommodation, is crucial,” Wawn said, citing labour shortages, high building costs, and regulatory delays as obstacles.
She called for a coordinated government effort to address these barriers, noting that the industry is still waiting on reforms related to apprenticeships and skilled migration, which could help alleviate workforce constraints.
“We can’t keep dragging our feet with the housing crisis,” Wawn said. “Meaningful action to address supply-side barriers in the housing market is not happening fast enough. “Most of the solutions to the housing crisis are in ministerial portfolios outside of the housing portfolio so ministers need to be working together to get the job done.”
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